The writer, former senior adviser to UK chancellors Philip Hammond and Sajid Javid, is a partner at Flint Global; he writes for himself
Boris Johnson’s government has been fundamentally ‘non-conservative’. This has been the impression given by the Conservative leadership race so far. Inevitably, the debate was dominated by the most successful leader of the modern Conservative party, Margaret Thatcher.
What we’ve heard is at best only a partial reflection of his philosophy: Big Tories lined up to remind candidates of his aversion to unfunded tax cuts when inflation soars. Moreover, the debate ignores a much richer history of conservative economic thought.
The conservative economy has had its ups and downs over the past two hundred years. Robert Peel’s program of liberalization in the mid-nineteenth century was followed by a period of skepticism towards laissez-faire. With the rise of Labour, the party changed to define itself against socialism, but the period after 1945 nevertheless saw conservatives make peace with the welfare state and preside over a mixed economy. It was only under Thatcher that the backsliding of the state became central.
This development, however, should not be confused with a lack of principles. Throughout, four basic tenets of conservative economic thought have endured. First, conservative economics has tended to be pragmatic, skeptical of ideology, and grounded in realism. Conservatism rejected intellectual rigidity, adapting instead to the problems of the day.
Second, he welcomed economic change, both for the progress it can bring and for ensuring political and social stability. The task is to manage change carefully, considering how people and communities need to be protected.
The third key principle is the belief that prosperity and opportunity should be widely shared. This common thread runs from Benjamin Disraeli’s recognition of the dangers of the existence of “two nations”, rich and poor, to by Harold Macmillan recognition of the “clear duty” of conservatism to sections of society that do not participate in economic progress.
Finally, there is the role of the state. Yes, conservatives have always looked suspiciously at too powerful a government – but that should not be confused with small-state libertarianism. The conservative approach has been to see the state as a facilitator, rather than a controller, of economic activity.
These are the principles that must now be applied to the challenges ahead. In the short term, this means managing the massive spike in inflation and the slowdown it can cause. Beyond that, the next Prime Minister must look to longer-term challenges. Given recent anemic growth, a plan to maximize it should be a top priority. But a true conservative is a realist and must recognize that even the most brilliant execution could nonetheless see the economy grow more slowly than before, held back by inevitable structural factors: an aging population, the inexorable move towards more services and the decline of globalization. . Continued growth cannot therefore serve as a hedge to avoid difficult decisions elsewhere.
Specifically, weaker growth means that two other challenges the UK was already facing are likely to intensify. Income levels and regional inequalities in Britain are high by historical and international standards. History tells us that low growth tends to see more intense fights over distribution, which adds urgency to the issue. Weaker growth also means that structural pressures on public finances cannot be ignored.
To face future growth, inequality and fiscal challenges, today’s conservatism must once again adapt; but it must be based on long-standing conservative principles, not empty promises of a partial imitation of Thatcherism.